Calculate the IRR of a 20-year project with a cost of $400,000 and annual cash flows of $50,000 in years 1-10 and $25,000 in years 11-20. The company's required rate of return is 10%.
A) 4.53%
B) 6.53%
C) 8.53%
D) 10.53%
E) 12.53%

Question

Quizplus · Accepted Answer

The IRR is the discount rate that makes the net present value (NPV) of the cash flows equal to zero. By calculating the IRR for the given cash flows, it is found to be approximately 8.53%.

Calculate the IRR of a 20-Year Project with a Cost